Compensation is something given or received as an equivalent for services, debt, loss, injury, suffering, goods, etc. Compensation is usually provided in the form of money. Alternatively, compensation may be given as a product or service in return for the product or service provided, such as stock options, insurance policy, and/or other compensatory items.
For example, if an individual is employed by a company on a full-time basis, the individual may be compensated for his services to the company through a salary package. A salary package for an employee typically includes a gross pay amount that is paid by the employer to the employee on a set periodic basis. The salary package may also include individual and/or group benefits, such as retirement savings, health care, childcare reimbursement, life insurance, parking, paid vacation, tuition reimbursement, and/or other benefits.
In turn, when the employee receives payment, he uses the compensation to pay for products and services received. For example, an individual makes payments on a daily basis for a variety of products and services like, food, apartment rent, gasoline, telephone bills, prescription medicine, health services, and/or other items. Similarly, a company may make payments to other companies on a periodic or on an as needed basis for products or services. Such payments may be performed by providing the appropriate recipient with hard currency, personal or company check, debit note, money order, and/or other forms of payment. Such payment may also be performed electronically. For example, payment may be performed by an electronic funds transfer (or direct deposit), using a debit or a credit card, and/or other methods of payment. The recipient of the funds may then access the appropriate financial account to gain access of the payment received.